BP (NYSE:BP) Being Shorted by Bill Ackman

Bill Ackman, manager of the Pershing Square Capital Management fund, said he's shorting the debt of BP (NYSE:BP) using credit default swaps.

According to Ackman, he believes the damage BP has done to its reputation in the U.S. keeps them from being able to "operate effectively" in the U.S., where they have their largest presence.

Ackman also said acquiring the credit default swaps was cheap, especially because of the huge legal liabilities they face, and the uncertainty as to how much they'll end up costing the oil giant.

Credit default swaps are a type of insurance used to protect a company against defaulting on its debt.